How to get CRA Tax Penalty Waived, Reduced or Reversed?

Question

Hi Phil

I found your website and I’m hoping you can help shed some light on my situation. Last year my accountant filed a few late tax returns for me and I was unpleasantly shocked about how much CRA charged me in penalties (about $8,000). I know it’s my fault for not filing my tax returns on time, but I really wish my accountant warned me about possible penalties.

Generally speaking, after CRA applies a penalty you have only 3 options:

The first option is to adjust your tax returns (via form T1adj) for any errors and changes that need to be made. If you can reduce the amount of taxes owing, CRA will reduce penalties accordingly. That being said, you can only make actual adjustments that you can substantiate, such as additional expenses and credits that were not previously claimed.

The second option would be to file a Notice of Objection within 90 days of the tax return assessment. You would only file an objection to the original assessment if you disagreed with how CRA has assessed the returns, not necessarily because of a required adjustment. For example, perhaps CRA disallowed some of your credits and/or expenses and you feel as though you have a reasonable basis for claiming these items. In that case, a objection would be appropriate.

The information contained in this article is for general use only and should not be viewed as professional advice. Accounting and tax rules and regulations regularly change and individuals should contact a competent professional to obtain accounting and tax advice based on their specific situation.

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